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ICAP Bond (5-98)
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Form 17-02-1421 (Ed. 5-98)
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Page 11 of 19
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Conditions and Limitations
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General Exclusions - Applicable to All Insuring Clauses
(continued)
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h.
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loss resulting from dishonest acts by any member of the Board of Directors or Board of Trustees of the ASSURED who is not an
Employee
, acting alone or in collusion with others;
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i.
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loss, or that part of any loss, resulting solely from any
violation by the ASSURED or by any
Employee
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(1)
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of any law regulating:
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a.
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the issuance, purchase or sale of securities,
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b.
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securities transactions on security or commodity exchanges or the over the counter market,
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c.
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investment companies,
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d.
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investment advisors, or
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(2)
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of any rule or regulation made pursuant to any such law; or
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j.
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loss of confidential information, material or data;
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k.
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loss resulting from voice requests or instructions received over the telephone, provided however, this Section 2.k. shall not apply to INSURING CLAUSE 7. or 9.
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Specific Exclusions -
Applicable To All Insuring Clauses Except Insuring Clause 1.
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3.
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This Bond does not directly or indirectly cover:
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a.
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loss caused by an
Employee
, provided, however, this
Section 3.a. shall not apply to loss covered under INSURING CLAUSE 2. or 3. which results directly from misplacement, mysterious unexplainable disappearance, or damage or destruction of
Property
;
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b.
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loss through the surrender of property away from premises of the ASSURED as a result of a threat:
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(1)
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to do bodily harm to any natural person, except loss of
Property
in transit in the custody of any person acting as messenger of the ASSURED, provided that when such transit was initiated there was no knowledge by
the ASSURED of any such threat, and provided further that this Section 3.b. shall not apply to INSURING CLAUSE 7., or
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(2)
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to do damage to the premises or
Property
of the ASSURED;
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c.
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loss resulting from payments made or withdrawals from any account involving erroneous credits to such account;
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d.
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loss involving
Items of Deposit
which are not finally paid for any reason provided however, that this Section 3.d. shall not apply to INSURING CLAUSE 10.;
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e.
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loss of property while in the mail;
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ICAP Bond (5-98)
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Form 17-02-1421 (Ed. 5-98)
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Page 12 of 19
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Conditions and Limitations
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Specific Exclusions - Applicable To All Insuring Clauses Except Insuring Clause 1. (continued)
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f.
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loss resulting from the failure for any reason of a financial or depository institution, its receiver or other liquidator to pay or deliver funds or other
Property
to the ASSURED provided further that this Section 3.f. shall
not apply to loss of
Property
resulting directly from robbery, burglary, misplacement, mysterious unexplainable disappearance, damage, destruction or removal from the possession, custody or control of the ASSURED.
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g.
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loss of
Property
while in the custody of a
Transportation Company
, provided however, that this Section 3.g. shall not apply to INSURING CLAUSE 3.;
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h.
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loss resulting from entries or changes made by a natural person with authorized access to a
Computer System
who acts in good faith on instructions, unless such instructions are given to that person by a software contractor or
its partner, officer, or employee authorized by the ASSURED to design, develop, prepare, supply, service, write or implement programs for the ASSUREDs
Computer System
; or
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i.
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loss resulting directly or indirectly from the input of data into a
Computer System
terminal, either on the premises of the customer of the ASSURED or under the control of such a customer, by a customer or other person who
had authorized access to the customers authentication mechanism.
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Specific Exclusions -
Applicable To All Insuring Clauses Except Insuring Clauses 1., 4., And 5.
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4.
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This bond does not directly or indirectly cover:
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a.
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loss resulting from the complete or partial non-payment of or default
on any loan whether such loan was procured in good faith or through trick, artifice, fraud or false pretenses; provided, however, this Section 4.a. shall not apply to INSURING CLAUSE 8.;
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b.
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loss resulting from forgery or any alteration;
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c.
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loss involving a counterfeit provided, however, this Section 4.c.
shall not apply to INSURING CLAUSE 5. or 6.
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Limit Of Liability/Non- Reduction And Non- Accumulation Of Liability
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5.
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At all times prior to termination of this Bond, this Bond shall continue in force for the limit stated in the applicable sections of ITEM 2. of the DECLARATIONS, notwithstanding any previous loss for which the COMPANY
may have paid or be liable to pay under this Bond provided, however, that the liability of the COMPANY under this Bond with respect to all loss resulting from:
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a.
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any one act of burglary, robbery or hold-up, or attempt thereat, in which no
Employee
is concerned or implicated, or
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b.
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any one unintentional or negligent act on the part of any one person resulting in damage to or destruction or misplacement of
Property
, or
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c.
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all acts, other than those specified in a. above, of any one person, or
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ICAP Bond (5-98)
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Form 17-02-1421 (Ed. 5-98)
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Page 13 of 19
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Conditions
and
Limitations
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Limit Of Liability/Non-
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d.
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any one casualty or event other than those specified in a., b., or c. above,
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Reduction And Non- Accumulation Of Liability (continued)
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shall be deemed to be one loss and shall be limited to the
applicable LIMIT OF LIABILITY stated in ITEM 2. of the DECLARATIONS of this Bond irrespective of the total amount of such loss or losses and shall not be cumulative in amounts from year to year or from period to period.
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All acts, as specified in c. above, of any one person which
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i.
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directly or indirectly aid in any way wrongful acts of any other person or persons, or
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ii.
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permit the continuation of wrongful acts of any other person or persons
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whether such acts are committed with or without the knowledge of the wrongful acts of the person so aided, and whether such acts are committed with or without the intent to aid such other person, shall be deemed to be
one loss with the wrongful acts of all persons so aided.
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Discovery
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6.
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This Bond applies only to loss first discovered by an officer of the ASSURED during the BOND PERIOD. Discovery occurs at the earlier of an officer of the ASSURED being aware of:
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a.
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facts which may subsequently result in a loss of a type covered by this Bond, or
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b.
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an actual or potential claim in which it is alleged that the ASSURED is liable to a third party,
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regardless of when the act or acts causing or contributing to such loss occurred, even though the amount of loss does not exceed the applicable DEDUCTIBLE AMOUNT, or the exact amount or details of loss may not then be
known.
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Notice To Company -
Proof - Legal Proceedings Against Company
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7.
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a.
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The ASSURED shall give the COMPANY notice thereof at the earliest practicable moment, not to exceed sixty (60) days after discovery of loss, in an amount that is in excess of 50% of the applicable DEDUCTIBLE AMOUNT, as stated in
ITEM 2. of the DECLARATIONS.
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b.
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The ASSURED shall furnish to the COMPANY proof of loss, duly sworn to,
with full particulars within six (6) months after such discovery.
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c.
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Securities listed in a proof of loss shall be identified by certificate or bond numbers, if issued with them.
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d.
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Legal proceedings for the recovery of any loss under this Bond shall not be brought prior to the expiration of sixty (60) days after the proof of loss is filed with the COMPANY or after the expiration of twenty-four (24) months from
the discovery of such loss.
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e.
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This Bond affords coverage only in favor of the ASSURED. No claim, suit, action or legal proceedings shall be brought under this Bond by anyone other than the
ASSURED.
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ICAP Bond (5-98)
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Form 17-02-1421 (Ed. 5-98)
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Page 14 of 19
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Conditions and Limitations
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Notice To Company -
Proof - Legal Proceedings
Against Company
(
continued)
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f.
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Proof of loss involving
Voice Initiated Funds Transfer Instruction
shall include electronic recordings of such instructions.
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Deductible Amount
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8.
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The COMPANY shall not be liable under any INSURING CLAUSES of this Bond on account of loss unless the amount of such loss, after deducting the net amount of all reimbursement and/or recovery obtained or made by the
ASSURED, other than from any Bond or policy of insurance issued by an insurance company and covering such loss, or by the COMPANY on account thereof prior to payment by the COMPANY of such loss, shall exceed the DEDUCTIBLE AMOUNT set forth in
ITEM 3. of the DECLARATIONS, and then for such excess only, but in no event for more than the applicable LIMITS OF LIABILITY stated in ITEM 2. of the DECLARATIONS.
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There shall be no deductible applicable to any loss under INSURING CLAUSE 1. sustained by any
Investment Company
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Valuation
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9.
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BOOKS OF ACCOUNT OR OTHER RECORDS
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The value of any loss of
Property
consisting of books of account or other records used by the ASSURED in the conduct of its business shall be the amount paid by the ASSURED for blank books, blank pages, or other
materials which replace the lost books of account or other records, plus the cost of labor paid by the ASSURED for the actual transcription or copying of data to reproduce such books of account or other records.
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The value of any loss of
Property
other than books of account or other records used by the ASSURED in the conduct of its business, for which a claim is made shall be determined by the average market value of such
Property
on the business day immediately preceding discovery of such loss provided, however, that the value of any
Property
replaced by the ASSURED with the consent of the COMPANY and prior to the settlement of any claim for such
Property
shall be the actual market value at the time of replacement.
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In the case of a loss of interim certificates, warrants, rights or other securities, the production of which is necessary to the exercise of subscription, conversion, redemption or deposit privileges, the value of them
shall be the market value of such privileges immediately preceding their expiration if said loss is not discovered until after their expiration. If no market price is quoted for such
Property
or for such privileges, the value shall be fixed
by agreement between the parties.
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OTHER PROPERTY
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The value of any loss of
Property
, other than as stated above, shall be the actual cash value or the cost of repairing or replacing such
Property
with
Property
of like quality and value, whichever is
less.
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ICAP Bond (5-98)
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Form 17-02-1421 (Ed. 5-98)
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Page 15 of 19
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Conditions and Limitations
(continued)
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Securities Settlement
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10.
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In the event of a loss of securities covered under this Bond, the COMPANY may, at its sole discretion, purchase replacement securities, tender the value of the securities in money, or issue its indemnity to effect
replacement securities.
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The indemnity required from the ASSURED under the terms of this Section against all loss, cost or expense arising from the replacement of securities by the COMPANYS indemnity shall be:
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a.
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for securities having a value less than or equal to the applicable DEDUCTIBLE AMOUNT - one hundred (100%) percent;
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b.
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for securities having a value in excess of the DEDUCTIBLE AMOUNT but within the applicable LIMIT OF LIABILITY - the percentage that the DEDUCTIBLE AMOUNT bears to the value of the securities;
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c.
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for securities having a value greater than the applicable LIMIT OF LIABILITY - the percentage that the DEDUCTIBLE AMOUNT and portion in excess of the applicable LIMIT OF LIABILITY bears to the value of the securities.
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The value referred to in Section 10.a., b., and c. is the value in accordance with Section 9, Valuation, regardless of the value of such securities at the time the loss under the COMPANYS indemnity is
sustained.
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The COMPANY is not required to issue its indemnity for any portion of a loss of securities which is not covered by this Bond; however, the COMPANY may do so as a courtesy to the ASSURED and at its sole
discretion.
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The ASSURED shall pay the proportion of the Companys premium charge for the Companys indemnity as set forth in Section 10.a., b., and c. No portion of the LIMIT OF LIABILITY shall be used as payment of
premium for any indemnity purchased by the ASSURED to obtain replacement securities.
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Subrogation - Assignment
Recovery
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11.
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In the event of a payment under this Bond, the COMPANY shall be subrogated to all of the ASSUREDS rights of recovery against any person or entity to the extent of such payment. On request, the ASSURED shall deliver
to the COMPANY an assignment of the ASSUREDS rights, title and interest and causes of action against any person or entity to the extent of such payment.
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Recoveries, whether effected by the COMPANY or by the ASSURED, shall be applied net of the expense of such recovery in the following order:
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a.
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first, to the satisfaction of the ASSUREDS loss which would otherwise have been paid but for the fact that it is in excess of the applicable LIMIT OF LIABILITY,
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b.
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second, to the COMPANY in satisfaction of amounts paid in settlement of the ASSUREDS claim,
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c.
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third, to the ASSURED in satisfaction of the applicable DEDUCTIBLE AMOUNT, and
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ICAP Bond (5-98)
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Form 17-02-1421 (Ed. 5-98)
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Page 16 of 19
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Conditions and Limitations
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Subrogation - Assignment
Recovery
(continued)
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d.
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fourth, to the ASSURED in satisfaction of any loss suffered by the ASSURED which was not covered under this Bond.
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Recovery from reinsurance or indemnity of the COMPANY
shall not be deemed a recovery under this section.
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Cooperation Of Assured
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12.
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At the COMPANYS request and at reasonable times and places designated by the COMPANY, the ASSURED shall:
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a.
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submit to examination by the COMPANY and subscribe to the same under oath,
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b.
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produce for the COMPANYS examination all pertinent records, and
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c.
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cooperate with the COMPANY in all matters pertaining to the loss.
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The ASSURED shall execute all papers and render assistance to secure to the COMPANY the rights and causes of action provided for under this Bond. The ASSURED shall do nothing after loss to prejudice such rights or causes
of action.
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Termination
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13.
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If the Bond is for a sole ASSURED, it shall not be terminated unless written notice shall have been given by the acting party to the affected party and to the Securities and Exchange Commission, Washington, D.C., not
less than sixty (60) days prior to the effective date of such termination.
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If the Bond is for a joint ASSURED, it shall not be terminated unless written notice shall have been given by the acting party to the affected party, and by the COMPANY to all ASSURED
Investment Companies
and to
the Securities and Exchange Commission, Washington, D.C., not less than sixty (60) days prior to the effective date of such termination.
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This Bond will terminate as to any one ASSURED, other than an
Investment Company
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a.
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immediately on the taking over of such ASSURED by a receiver or other liquidator or by State or Federal officials, or
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b.
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immediately on the filing of a petition under any State or Federal statute relative to bankruptcy or reorganization of the ASSURED, or assignment for the benefit of creditors of the ASSURED, or
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c.
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immediately upon such ASSURED ceasing to exist, whether through merger into another entity, disposition of all of its assets or otherwise.
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The COMPANY shall refund the unearned premium computed at short rates in accordance with the standard short rate cancellation tables if terminated by the ASSURED or pro rata if terminated for any other reason.
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ICAP Bond (5-98)
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Form 17-02-1421 (Ed. 5-98)
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Page 17 of 19
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Conditions and Limitations
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Termination (continued)
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If any partner, director, trustee, or officer or supervisory employee of an ASSURED not acting in collusion with an
Employee
learns of any dishonest act committed by such
Employee
at any time, whether in
the employment of the ASSURED or otherwise, whether or not such act is of the type covered under this Bond, and whether against the ASSURED or any other person or entity, the ASSURED:
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a.
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shall immediately remove such
Employee
from a position that would enable such
Employee
to cause the ASSURED to suffer a loss covered by this Bond; and
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b.
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within forty-eight (48) hours of learning that an
Employee
has committed any dishonest act, shall notify the COMPANY, of such action and provide full particulars of such dishonest act.
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The COMPANY may terminate coverage as respects any
Employee
sixty (60) days after written notice is received by each ASSURED
Investment Company
and the Securities and Exchange Commission, Washington, D.C.
of its desire to terminate this Bond as to such
Employee
.
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Other Insurance
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14.
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Coverage under this Bond shall apply only as excess over any valid and collectible insurance, indemnity or suretyship obtained by or on behalf of:
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a.
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the ASSURED,
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b.
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a
Transportation Company
, or
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c.
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another entity on whose premises the loss occurred or which employed the person causing the loss or engaged the messenger conveying the
Property
involved.
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Conformity
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15.
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If any limitation within this Bond is prohibited by any law controlling this Bonds construction, such limitation shall be deemed to be amended so as to equal the minimum period of limitation provided by such
law.
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Change or Modification
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16.
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This Bond or any instrument amending or affecting this Bond may not be changed or modified orally. No change in or modification of this Bond shall be effective except when made by written endorsement to this Bond signed
by an authorized representative of the COMPANY.
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If this Bond is for a sole ASSURED, no change or modification which would adversely affect the rights of the ASSURED shall be effective prior to sixty (60) days after written notice has been furnished to the Securities
and Exchange Commission, Washington, D.C., by the acting party.
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|
ICAP Bond (5-98)
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|
Form 17-02-1421 (Ed. 5-98)
|
|
Page 18 of 19
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Conditions And Limitations
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Change or
Modification
(continued)
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If this Bond is for a joint ASSURED, no charge or modification which would adversely affect the rights of the ASSURED shall be effective prior to sixty (60) days after written notice has been furnished to all insured
Investment
Companies
and to the Securities and Exchange Commission, Washington, D.C., by the COMPANY.
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|
ICAP Bond (5-98)
|
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|
Form 17-02-1421 (Ed. 5-98)
|
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Page 19 of 19
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FEDERAL INSURANCE COMPANY
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Endorsement No: 1
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Bond Number: 82307788
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NAME OF ASSURED: FS INVESTMENT CORPORATION
AMEND NAME OF ASSURED
ENDORSEMENT
It is agreed that NAME OF ASSURED of the DECLARATIONS for this Bond is amended to include the following:
FS Investment Corporation
FS/KKR Advisor, LLC
This Endorsement applies to loss discovered after 12:01 a.m. on April 16, 2018.
ALL OTHER TERMS AND CONDITIONS OF THIS BOND REMAIN UNCHANGED.
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Date: April 17, 2018
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By
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Authorized Representative
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ICAP Bond
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Form 17-02-6272 (Ed. 8-04)
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Page 1
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ENDORSEMENT/RIDER
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Effective date of
this endorsement/rider: April
16, 2018
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FEDERAL INSURANCE COMPANY
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Endorsement/Rider No.
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2
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To be attached to and
form a part of Bond
No.
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82307788
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Issued to: FS INVESTMENT CORPORATION
FRAUDULENT TRANSFER INSTRUCTIONS
ENDORSEMENT
(For use with the ICAP bond)
In
consideration of the premium charged, it is agreed that this bond is amended as follows:
(1)
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The following Insuring Clause is added:
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FRAUDULENT TRANSFER INSTRUCTIONS
Loss resulting directly from the ASSURED having, in good faith, transferred money on deposit in a
Customers
account, or a
Customers Certificated Security
or
Uncertificated Security
,
in reliance upon a fraudulent instruction transmitted to the ASSURED via telefacsimile, telephone or electronic mail; provided, however, that:
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A.
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the fraudulent instruction purports, and reasonably appears, to have originated from:
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ii.
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an
Employee
acting on instructions of such
Customer
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or
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iii.
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another financial institution acting on behalf of such
Customer
with authority to make such instructions; and
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B.
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the sender of the fraudulent instruction verified the instruction with the password, PIN, or other security code of such
Customer
;
and
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C.
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the sender was not, in fact, such
Customer
,
was not authorized to act on behalf of such
Customer
,
and was not an
Employee
;
and
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D.
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the instruction was received by an
Employee
specifically authorized by the ASSURED to receive and act upon such instructions; and
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E.
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for any transfer exceeding the amount set forth in paragraph (8) of this endorsement, the ASSURED verified the instructions via a call back to a predetermined telephone number set forth in the ASSUREDs
written agreement with such
Customer
or other verification procedure approved in writing by the COMPANY; and
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14-02-21330 (10/2014)
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Page 1
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F.
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the ASSURED preserved a contemporaneous record of the call back, if any, and the instruction which verifies use of the authorized password, PIN or other security code of the
Customer
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(2)
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For the purposes of the coverage afforded by this endorsement, the following terms shall have the following meanings:
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Certificated Security
means a share, participation or other interest in property of, or an enterprise of, the issuer or an obligation of
the issuer, which is:
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(1)
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represented by an instrument issued in bearer or registered form, and
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(2)
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of a type commonly dealt in on securities exchanges or markets or commonly recognized in any area in which it is issued or dealt in as a medium for investment, and
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(3)
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either one of a class or series or by its terms divisible into a class or series of shares, participations, interests or obligations.
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Customer
means any individual, corporate partnership, proprietor, trust customer, shareholder or subscriber of an
Investment
Company
which has a written agreement with the ASSURED authorizing the ASSURED to transfer
Money
on deposit in an account or
Certificated Security
or
Uncertificated Security
in reliance upon instructions transmitted to the
ASSURED via telefacsimile, telephone or electronic mail to transmit the fraudulent instruction.
Uncertificated Security
means a
share, participation or other interest in property of or an enterprise of the issuer or an obligation of the issuer, which is:
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(1)
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not represented by an instrument and the transfer of which is registered on books maintained for that purpose by or on behalf of the issuer, and
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(2)
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of a type commonly dealt in on securities exchanges or markets, and
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(3)
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either one of a class or series or by its terms divisible into a class or series of shares, participations, interests or obligations.
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(3)
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It shall be a condition precedent to coverage under this Insuring Clause that the ASSURED assert any available claims, offsets or defenses against such
Customer
, any financial institution or any other party to
the transaction.
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(4)
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Solely with respect to the Fraudulent Transfer Instruction Insuring Clause, the following Exclusions are added:
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A.
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Loss resulting directly or indirectly from a fraudulent instruction if the sender, or anyone acting in collusion with the sender, ever had authorized access to such
Customers
password, PIN or other security
code; and
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B.
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Loss resulting directly or indirectly from the fraudulent alteration of an instruction to initiate an automated clearing house (ACH) entry, or group of ACH entries, transmitted as an electronic message, or as an
attachment to an electronic message, sent via the internet, unless:
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i.
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each ACH entry was individually verified via the call back procedure without regard to the amount of the entry; or
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ii.
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the instruction was formatted, encoded or encrypted so that any altercation in the ACH entry or group of ACH entries would be apparent to the ASSURED.
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14-02-21330 (10/2014)
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Page 2
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(5)
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Solely with respect to the Fraudulent Transfer Instruction Insuring Clause, Exclusion 2.k. is deleted and replaced with the following:
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k.
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loss resulting from voice requests or instructions received over the telephone, provided however, this Section 2.k. shall not apply to INSURING CLAUSE 7. or 9. or the Fraudulent Transfer Instruction Insuring
Clause.
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(6)
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For the purposes of the Fraudulent Transfer Instruction Insuring Clause, all loss or losses involving one natural person or entity, or one group of natural persons or entities acting together, shall be a Single Loss
without regard to the number of transfers or the number of instructions involved.
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(7)
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For the purposes of the Fraudulent Transfer Instruction Insuring Clause, the Single Loss Limit of Liability shall be $ 2,500,000. The Deductible Amount shall be $ 10,000.
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(8)
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The amount of any single transfer for which verification via call back will be required is: $ 10,000.
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The
title and any headings in this endorsement/rider are solely for convenience and form no part of the terms and conditions of coverage.
All other terms,
conditions and limitations of this Bond shall remain unchanged.
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Authorized Representative
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14-02-21330 (10/2014)
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Page 3
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FEDERAL INSURANCE COMPANY
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Endorsement No.: 3
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Bond Number: 82307788
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NAME OF ASSURED: FS INVESTMENT CORPORATION
EXTENDED COMPUTER SYSTEMS
ENDORSEMENT
It is agreed that this Bond is amended as follows:
1.
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By adding the following INSURING CLAUSE:
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13.
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Extended Computer Systems
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A.
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Electronic Data, Electronic Media, Electronic Instruction
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Loss resulting directly from:
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(1)
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the fraudulent modification of
Electronic Data, Electronic Media
or
Electronic Instruction
being stored within or being run within any system covered under this INSURING CLAUSE,
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(2)
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robbery, burglary, larceny or theft of
Electronic Data, Electronic Media
or
Electronic Instructions
,
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(3)
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the acts of a hacker causing damage or destruction of
Electronic Data
,
Electronic Media
or
Electronic Instruction
owned by the ASSURED or for which the ASSURED is legally liable, while stored
within a
Computer System
covered under this INSURING CLAUSE, or
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(4)
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the damage or destruction of
Electronic Data, Electronic Media
or
Electronic Instruction
owned by the ASSURED or for which the ASSURED is legally liable while stored within a
Computer System
covered
under INSURING CLAUSE 8, provided such damage or destruction was caused by a computer program or similar instruction which was written or altered to intentionally incorporate a hidden instruction designed to damage or destroy
Electronic Data,
Electronic Media,
or
Electronic Instruction
in the
Computer System
in which the computer program or instruction so written or so altered is used.
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ICAP2 Bond
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Form 17-02-2976 (Ed. 1-02)
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Page 1
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B.
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Electronic Communication
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Loss resulting directly from the ASSURED having transferred, paid or
delivered any funds or property, established any credit, debited any account or given any value on the faith of any electronic communications directed to the ASSURED, which were transmitted or appear to have been transmitted through:
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(1)
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an
Electronic Communication System
,
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(2)
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an automated clearing house or custodian, or
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(3)
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a Telex, TWX, or similar means of communication,
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directly into the ASSUREDS
Computer
System
or
Communication Terminal
,
and fraudulently purport to have been sent by a customer, automated clearing house, custodian, or financial institution, but which communications were either not sent by said customer, automated
clearing house, custodian, or financial institution, or were fraudulently modified during physical transit of
Electronic Media
to the ASSURED or during electronic transmission to the ASSUREDS
Computer System
or
Communication
Terminal
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C.
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Electronic Transmission
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Loss resulting directly from a customer of the ASSURED, any automated
clearing house, custodian, or financial institution having transferred, paid or delivered any funds or property, established any credit, debited any account or given any value on the faith of any electronic communications, purporting to have been
directed by the ASSURED to such customer, automated clearing house, custodian, or financial institution initiating, authorizing, or acknowledging, the transfer, payment, delivery or receipt of funds or property, which communications were transmitted
through:
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(1)
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an
Electronic Communication System
,
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(2)
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an automated clearing house or custodian, or
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(3)
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a Telex, TWX, or similar means of communication,
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directly into a
Computer System
or
Communication Terminal
of said customer, automated clearing house, custodian, or financial institution, and fraudulently purport to have been directed by the ASSURED, but which communications were either not sent by the ASSURED, or were
fraudulently modified during physical transit of
Electronic Media
from the ASSURED or during electronic transmission from the ASSUREDS
Computer System
or
Communication Terminal
,
and for which loss the ASSURED is
held to be legally liable.
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ICAP2 Bond
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Form 17-02-2976 (Ed. 1-02)
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Page 2
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2.
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By adding to Section 1., Definitions, the following:
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s.
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Communication Terminal
means a teletype, teleprinter or video display terminal, or similar device capable of sending or receiving information electronically.
Communication Terminal
does not mean a
telephone.
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t.
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Electronic Communication System
means electronic communication operations by Fedwire, Clearing House Interbank Payment System (CHIPS), Society of Worldwide International Financial Telecommunication (SWIFT),
similar automated interbank communication systems, and Internet access facilities.
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u.
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Electronic Data
means facts or information converted to a form usable in
Computer Systems
and which is stored on
Electronic Media
for use by computer programs.
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v.
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Electronic Instruction
means computer programs converted to a form usable in a
Computer
System
to act upon
Electronic Data
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w.
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Electronic Media
means the magnetic tape, magnetic disk, optical disk, or any other bulk media on which data is recorded.
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3.
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By adding the following Section after Section 4., Specific Exclusions-Applicable to All INSURING CLAUSES except 1., 4., and 5.:
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Section 4.A. Specific Exclusions-Applicable to INSURING CLAUSE 13
This Bond does not directly or indirectly cover:
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a.
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loss resulting directly or indirectly from
Forged
, altered or fraudulent negotiable instruments, securities, documents or written instruments used as source documentation in the preparation of
Electronic
Data
;
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b.
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loss of negotiable instruments, securities, documents or written instruments except as converted to
Electronic Data
and then only in that converted form;
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c.
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loss resulting from mechanical failure, faulty construction, error in design, latent defect, wear or tear, gradual deterioration, electrical disturbance,
Electronic Media
failure or breakdown or any malfunction
or error in programming or error or omission in processing;
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d.
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loss resulting directly or indirectly from the input of
Electronic Data
at an authorized electronic terminal of an
Electronic
Funds Transfer System
or a
Customer Communication System
by a person who had authorized access from a customer to that customers authentication mechanism; or
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e.
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liability assumed by the ASSURED by agreement under any contract, unless such liability would have attached to the ASSURED even in the absence of such agreement; or
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f.
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loss resulting directly or indirectly from:
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(1)
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written instruction unless covered under this INSURING CLAUSE; or
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(2)
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instruction by voice over the telephone, unless covered under this INSURING CLAUSE.
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ICAP2 Bond
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Form 17-02-2976 (Ed. 1-02)
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Page 3
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4.
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By adding to Section 9., Valuation, the following:
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Electronic Data, Electronic Media, Or
Electronic Instruction
In case of loss of, or damage to,
Electronic Data, Electronic Media
or
Electronic Instruction
used by
the ASSURED in its business, the COMPANY shall be liable under this Bond only if such items are actually reproduced form other
Electronic Data,
Electronic Media
or
Electronic
Instruction
of the same kind or quality and
then for not more than the cost of the blank media and/or the cost of labor for the actual transcription or copying of data which shall have been furnished by the ASSURED in order to reproduce such
Electronic Data, Electronic Media
or
Electronic Instruction
subject to the applicable SINGLE LOSS LIMIT OF LIABILITY.
However, if such
Electronic Data
can not be
reproduced and said
Electronic Data
represents
Securities
or financial instruments having a value, then the loss will be valued as indicated in the SECURITIES and OTHER PROPERTY paragraphs of this Section.
This Endorsement applies to loss discovered after 12:01 a.m. on April 16, 2018.
ALL OTHER TERMS AND CONDITIONS OF THIS BOND REMAIN UNCHANGED.
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Date: April 17, 2018
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By
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Authorized Representative
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ICAP2 Bond
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Form 17-02-2976 (Ed. 1-02)
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Page 4
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FEDERAL INSURANCE COMPANY
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Endorsement No.: 4
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Bond Number: 82307788
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NAME OF ASSURED: FS INVESTMENT CORPORATION
AUTOMATED TELEPHONE TRANSACTION
ENDORSEMENT
It is agreed that this Bond is amended as follows:
1.
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By adding the following INSURING CLAUSE:
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14.
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Automated Telephone System Transaction
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Loss resulting directly from the ASSURED having
transferred funds on the faith of any
Automated Phone System (APS) Transaction
,
where the request for such
APS Transaction
is unauthorized or fraudulent and is made with the intent to deceive. In order for coverage to apply
under this INSURING CLAUSE the ASSURED shall maintain and follow all
APS Designated Procedures
.
A single failure of the ASSURED to maintain and follow a particular
APS Designated Procedure
in a particular
APS Transaction
will not preclude coverage under this INSURING CLAUSE.
2.
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By adding to Section 1., Definitions, the following:
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x.
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APS Designated Procedures
means all of the following procedures:
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(1)
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No
APS Transaction
shall be executed unless the shareholder or unitholder to whose account such an
APS
Transaction
relates has previously elected to
APS
Transactions
.
(Election
in Application)
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(2)
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All
APS Transactions
shall be logged or otherwise recorded and the records shall be retained for at least six (6) months. (Logging)
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Information contained in the records shall be capable of being retrieved and produced within a reasonable time after retrieval of specific
information is requested, at a success rate of no less than 85 percent.
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(3)
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The caller in any request for an
APS Transaction
,
before executing that
APS Transaction
must enter a personal identification number (PIN), social security number and account number. (Identity Test)
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If the caller fails to enter a correct PIN within three (3) attempts, the caller must not be allowed additional
attempts during the same telephone call to enter the PIN. The caller may either be instructed to redial a customer service representative or may be immediately connected to such a representative. (Limited attempts to Enter PIN)
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ICAP Bond
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Form 17-02-2345 (Ed. 10-00)
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Page 1
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(4)
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A written confirmation of any
APS Transaction
or change of address shall be mailed to the shareholder or unitholder to whose account such transaction relates, at the record address, by the end of the
insureds next regular processing cycle, but in no event later than five (5) business days following such
APS Transaction
.
(Written Confirmation)
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(5)
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Access to the equipment which permits the entity receiving the
APS Transaction
request to process and effect the transaction shall be limited in the following manner: (Access to APS Equipment)
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y.
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APS Election
means any election concerning various account features available to the shareholder or unitholder which is made through the
Automated Phone System
by means of information transmitted by an
individual caller through use of a
Automated Phone System
.
These features include account statements, auto exchange, auto asset builder, automatic withdrawal, dividend/capital gain options, dividend sweep, telephone balance consent and
change of address.
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z.
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APS Exchange
means any exchange of shares or units in a registered account of one fund into shares or units in an account with the same tax identification number and same ownership-type code of another fund in
the same complex pursuant to exchange privileges of the two funds, which exchange is requested through the
Automated Phone System
by means of information transmitted by an individual caller through use of an
Automated Phone System
.
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aa.
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APS Purchase
means any purchase of shares or units issued by an
Investment Company
which is requested through an
Automated Phone System
.
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bb.
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APS Redemption
means any redemption of shares or units issued by an
Investment Company
which it requested through the telephone by means of information transmitted by an individual caller through use of a
Automated Phone System
.
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cc.
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APS Transaction
means any
APS Purchase, APS Redemption, APS Election
or
APS Exchange
.
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dd.
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Automated Phone System
means an automated system which receives and converts to executable instructions transmissions through the
Automated Phone System
through use of a touch-tone keypad or other tone
system; and always excluding transmissions from a computer system or part thereof.
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3.
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By adding the following Section after Section 4., Specific Exclusions-Applicable To All Insuring Clauses Except 1., 4., 5.:
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Section 4.A Specific Exclusion-Applicable to Insuring Clause 14
This Bond does not directly or indirectly cover under Insuring Clause 14:
Loss resulting from:
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a.
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the redemption of shares or units, where the proceeds of such redemption are made payable to other than:
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(1)
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the shares or units of record,
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(2)
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a person designated to receive redemption proceeds, or
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(3)
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a bank account designated to receive redemption proceeds, or
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ICAP Bond
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Form 17-02-2345 (Ed. 10-00)
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Page 2
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b.
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the redemption of shares or units, where the proceeds of such redemption are paid by check mailed to any address, unless such address has either been designated the shareholder or unitholder by voice through an
Automated Phone System
or in writing, at least thirty (30) days prior to such redemption, or
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c.
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the redemption of shares or units, where shareholder or unitholder of the ASSURED designated bank account of record.
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This Endorsement applies to loss discovered after 12:01 a.m. on April 16, 2018.
ALL OTHER TERMS AND CONDITIONS OF THIS BOND REMAIN UNCHANGED.
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Date: April 17, 2018
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By
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Authorized Representative
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ICAP Bond
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Form 17-02-2345 (Ed. 10-00)
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Page 3
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FEDERAL INSURANCE COMPANY
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Endorsement No.: 5
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Bond Number: 82307788
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NAME OF ASSURED: FS INVESTMENT CORPORATION
UNAUTHORIZED SIGNATURE
ENDORSEMENT
It is agreed that this Bond is amended as follows:
1.
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By adding the following INSURING CLAUSE:
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15.
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Unauthorized Signature
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Loss resulting directly from the ASSURED having accepted, paid or
cashed any check or
Withdrawal Order
made or drawn on or against the account of the ASSUREDS customer which bears the signature or endorsement of one other than a person whose name and signature is on file with the ASSURED as a
signatory on such account.
It shall be a condition precedent to the ASSUREDS right of recovery under this INSURING CLAUSE that the
ASSURED shall have on file signatures of all the persons who are signatories on such account.
2.
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By adding to Section 1., Definitions, the following:
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ee.
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Instruction
means a written order to the issuer of an
Uncertificated Security
requesting that the transfer, pledge or release from pledge of the specified
Uncertificated Security
be registered.
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ff.
|
Uncertificated Security
means a share, participation or other interest in property of or an enterprise of the issuer or an obligation of the issuer, which is:
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(1)
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not represented by an instrument and the transfer of which is registered on books maintained for that purpose by or on behalf of the issuer, and
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(2)
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of a type commonly dealt in on securities exchanges or markets, and
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(3)
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either one of a class or series or by its terms divisible into a class or series of shares, participations, interests or obligations.
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ICAP Bond
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Form 17-02-5602 (Ed. 10-03)
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Page 1
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gg.
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Withdrawal Order
means a non-negotiable instrument, other than an
Instruction
,
signed by a customer of the ASSURED authorizing the ASSURED to debit the customers account in the amount of funds
stated therein.
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This Endorsement applies to loss discovered after 12:01 a.m. on April 16, 2018.
ALL OTHER TERMS AND CONDITIONS OF THIS BOND REMAIN UNCHANGED.
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Date: April 17, 2018
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By
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Authorized Representative
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ICAP Bond
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Form 17-02-5602 (Ed. 10-03)
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Page 2
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FEDERAL INSURANCE COMPANY
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Endorsement No.: 6
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Bond Number: 82307788
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NAME OF ASSURED: FS INVESTMENT CORPORATION
CLAIMS EXPENSE ENDORSEMENT
It is agreed that this Bond is amended as follows:
1.
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By adding the following INSURING CLAUSE:
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Reasonable expense incurred by the ASSURED, solely for independent firms or
individuals to determine the amount of loss where:
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(1)
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the loss is covered under the Bond, and
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(2)
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the loss is in excess of the applicable DEDUCTIBLE AMOUNT.
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2.
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Under General Exclusions-Applicable To All Insuring Clauses, Section 2.f. does not apply to loss covered under this INSURING CLAUSE.
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This Endorsement applies to loss discovered after 12:01 a.m. on April 16, 2018.
ALL OTHER TERMS AND CONDITIONS OF THIS BOND REMAIN UNCHANGED.
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Date: April 17, 2018
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By
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Authorized Representative
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ICAP Bond
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Form 17-02-6282 (Ed. 11-04)
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FEDERAL INSURANCE COMPANY
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Endorsement No.: 7
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Bond Number: 82307788
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NAME OF ASSURED: FS INVESTMENT CORPORATION
STOP PAYMENT ORDER OR REFUSAL TO
PAY CHECK ENDORSEMENT
It is agreed that this Bond is amended as follows:
1.
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By adding the following INSURING CLAUSE:
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17.
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Stop Payment Order or Refusal to Pay Check
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Loss resulting directly from the ASSURED being
legally liable to pay compensatory damages for:
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a.
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complying or failing to comply with notice from any customer of the ASSURED or any authorized representative of such customer, to stop payment on any check or draft made or drawn upon or against the ASSURED by such
customer or by any authorized representative of such customer, or
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b.
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refusing to pay any check or draft made or drawn upon or against the ASSURED by any customer of the ASSURED or by any authorized representative of such customer.
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2.
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By adding the following Specific Exclusion:
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Section 4.A. Specific Exclusions
Applicable to INSURING CLAUSE 17
This Bond does not directly or indirectly cover:
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a.
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liability assumed by the ASSURED by agreement under any contract, unless such liability would have attached to the ASSURED even in the absence of such agreement,
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(1)
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libel, slander, wrongful entry, eviction, defamation, false arrest, false imprisonment, malicious prosecution, assault or battery,
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(2)
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sickness, disease, physical bodily harm, mental or emotional distress or anguish, or death of any person, or
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This Endorsement applies to loss discovered after 12:01 a.m. on April 16, 2018.
ALL OTHER TERMS AND CONDITIONS OF THIS BOND REMAIN UNCHANGED.
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Date: April 17, 2018
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By
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Authorized Representative
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ICAP Bond
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Form 17-02-2365 (Ed. 10-00)
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ENDORSEMENT/RIDER
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Effective date of
this endorsement/rider: April 16, 2018
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FEDERAL INSURANCE COMPANY
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Endorsement/Rider No.
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8
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To be attached to and
form a part of Bond No.
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82307788
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Issued to: FS INVESTMENT CORPORATION
DELETING VALUATION-OTHER PROPERTY
AND AMENDING CHANGE OR MODIFICATION ENDORSEMENT
In consideration of the premium charged, it is agreed that this Bond is amended as follows:
1.
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The paragraph titled Other Property in Section 9, Valuation, is deleted in its entirety.
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2.
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The third paragraph in Section 16, Change or Modification, is deleted in its entirety and replaced with the following:
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If this Bond is for a joint ASSURED, no change or modification which would adversely affect the rights of the ASSURED shall be effective prior
to sixty (60) days after written notice has been furnished to all insured
Investment Companies
and the Securities and Exchange Commission, Washington, D.C., by the COMPANY.
The title and any headings in this endorsement/rider are solely for convenience and form no part of the terms and conditions of coverage.
All other terms, conditions and limitations of this Bond shall remain unchanged.
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Authorized Representative
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17-02-2437 (12/2006) rev.
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Page 1
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ENDORSEMENT/RIDER
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Effective date of
this endorsement/rider: April 16, 2018
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FEDERAL INSURANCE COMPANY
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Endorsement/Rider No.
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9
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To be attached to and
form a part of Bond No.
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82307788
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Issued to: FS INVESTMENT CORPORATION
AMEND SECTION 16 - CHANGE OR
MODIFICATION ENDORSEMENT
In consideration of the premium charged, it is agreed that Section 16, Change or Modification, the first and second full
paragraphs are deleted and replaced with the following:
This Bond or any instrument amending or affecting this Bond may not be changed or modified orally.
No change in or modification of this Bond shall be effective except when made by written endorsement to this Bond signed by an authorized representative of the COMPANY.
If this Bond is for a sole ASSURED, no change or modification which would adversely affect the rights of the ASSURED shall be effective prior to sixty
(60) days after written notice has been furnished to the affected party and the Securities and Exchange Commission, Washington, D.C., by the acting party.
The title and any headings in this endorsement/rider are solely for convenience and form no part of the terms and conditions of coverage.
All other terms, conditions and limitations of this Bond shall remain unchanged.
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Authorized Representative
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Q06-246 (02/2008) rev.
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Page 1
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ENDORSEMENT/RIDER
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Effective date of
this endorsement/rider: April 16, 2018
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FEDERAL INSURANCE COMPANY
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Endorsement/Rider No.
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10
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To be attached to and
form a part of Policy No.
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82307788
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Issued to: FS INVESTMENT CORPORATION
COMPLIANCE WITH APPLICABLE TRADE
SANCTION LAWS
It is agreed that this insurance does not apply to the extent that trade or economic sanctions or other similar laws or regulations
prohibit the coverage provided by this insurance.
The title and any headings in this endorsement/rider are solely for convenience and form no part of the
terms and conditions of coverage.
All other terms, conditions and limitations of this Policy shall remain unchanged.
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Authorized Representative
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14-02-9228 (2/2010)
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Page 1
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ENDORSEMENT/RIDER
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Effective date of
this endorsement/rider: April 16, 2018
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FEDERAL INSURANCE COMPANY
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Endorsement/Rider No.
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11
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To be attached to and
form a part of Policy No.
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82307788
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Issued to: FS INVESTMENT CORPORATION
AUTOMATIC INCREASE IN LIMITS
ENDORSEMENT
In consideration of the premium charged, it is agreed that GENERAL AGREEMENTS, Section C. Additional Offices Or Employees-Consolidation,
Merger Or Purchase Or Acquisition Of Assets Or Liabilities-Notice To Company, is amended by adding the following subsection:
Automatic
Increase in Limits for Investment Companies
If an increase in bonding limits is required pursuant to rule 17g-1 of the Investment Company
Act of 1940 (the Act), due to:
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(i)
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the creation of a new
Investment Company
;
or
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(ii)
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an increase in asset size of current
Investment Companies
covered under this Bond,
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then
the minimum required increase in limits shall take place automatically without payment of additional premium for the remainder of the BOND PERIOD.
The
title and any headings in this endorsement/rider are solely for convenience and form no part of the terms and conditions of coverage.
All other terms,
conditions and limitations of this Bond shall remain unchanged.
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Authorized Representative
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Q10-2021 (10/2010)
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Page 1
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ENDORSEMENT/RIDER
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Effective date of
this endorsement/rider: April 16, 2018
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FEDERAL INSURANCE COMPANY
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Endorsement/Rider No.
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12
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To be attached to and
form a part of Policy No.
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82307788
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Issued to: FS INVESTMENT CORPORATION
AMEND DEFINITION OF EMPLOYEE
ENDORSEMENT
In consideration of the premium charged, it is agreed that the term
Employee
as set forth in Section 1, Definitions, of the
Conditions and Limitations of this Bond is amended to include the following:
Salvatore Faia, but solely in his capacity, pursuant to a
written contract, as Chief Compliance Officer to any
Investment Company
.
The title and any headings in this endorsement/rider are solely
for convenience and form no part of the terms and conditions of coverage.
All other terms, conditions and limitations of this Bond shall remain
unchanged.
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Authorized Representative
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ENDORSEMENT/RIDER
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Effective date of
this endorsement/rider: April 16, 2018
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FEDERAL INSURANCE COMPANY
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Endorsement/Rider No.
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13
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To be attached to and
form a part of Bond No.
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82307788
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Issued to: FS INVESTMENT CORPORATION
AMEND DEFINITION OF FORGERY
ENDORSEMENT
In consideration of the premium charged, it is agreed that the definition of
Forgery
set forth in Section 1, Definitions, of the
Conditions and Limitations of this bond is deleted and replaced with the following:
Forgery
means:
(1)
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affixing the handwritten signature, or a reproduction of the handwritten signature, of another natural person without authorization and with the intent to deceive; or
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(2)
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affixing the name of an organization as an endorsement to a check without authority and with the intent to deceive.
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Provided, however, that a signature which consists in whole or in part of ones own name signed with or without authority, in any capacity, for any
purpose is not a
Forgery
.
An electronic or digital signature is not a reproduction of a handwritten signature or the name of an organization.
The title and any headings in this endorsement/rider are solely for convenience and form no part of the terms and conditions of coverage.
All other terms, conditions and limitations of this Bond shall remain unchanged.
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Authorized Representative
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14-02-21353 (11/2014)
<NYFTZFOOTER><NYFTZNOTICE>
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Page 1
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FEDERAL INSURANCE COMPANY
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Endorsement No.
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14
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Bond Number:
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82307788
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NAME OF ASSURED: FS INVESTMENT CORPORATION
REVISE ITEM 2. ENDORSEMENT
It is agreed that this Bond is amended by deleting ITEM 2. in its entirety on the DECLARATIONS and substituting the following:
ITEM 2.
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LIMITS OF LIABILITY-DEDUCTIBLE AMOUNTS:
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If Not Covered is inserted below opposite
any specified INSURING CLAUSE, such INSURING CLAUSE and any other reference to such INSURING CLAUSE in this Bond shall be deemed to be deleted.
There shall be no deductible applicable to any loss under INSURING CLAUSE 1 sustained by any
Investment Company
.
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INSURING CLAUSE
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SINGLE LOSS
LIMIT OF LIABILITY
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DEDUCTIBLE
AMOUNT
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1.
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Employee
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$
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2,500,000
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$
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0
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2.
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On Premises
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$
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2,500,000
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$
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10,000
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3.
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In Transit
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$
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2,500,000
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$
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10,000
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4.
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Forgery or Alteration
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$
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2,500,000
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$
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10,000
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5.
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Extended Forgery
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$
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2,500,000
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$
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10,000
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6.
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Counterfeit Money
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$
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2,500,000
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$
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10,000
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7.
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Threats to Person
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$
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Not Covered
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$
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N/A
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8.
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Computer System
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$
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2,500,000
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$
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10,000
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9.
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Voice Initiated Funds Transfer Instruction
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$
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See FTI End.
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$
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See FTI End.
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10.
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Uncollectible Items of Deposit
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$
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2,500,000
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$
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10,000
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11.
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Audit Expense
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$
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100,000
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$
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10,000
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12.
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Extended Computer Systems
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$
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2,500,000
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$
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10,000
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13.
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Automated Telephone Transaction
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$
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2,500,000
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$
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10,000
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14.
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Unauthorized Signature
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$
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100,000
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$
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5,000
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15.
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Claims Expense
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$
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100,000
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$
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5,000
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16.
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Stop Payment
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$
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25,000
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$
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1,000
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This Endorsement applies to loss discovered after 12:01 a.m. on April 16, 2018.
ALL OTHER TERMS AND CONDITIONS OF THIS BOND REMAIN UNCHANGED.
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Date: April 17, 2018
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By
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Authorized Representative
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ICAP Bond
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Form 17-02-1582 (Ed. 5-98)
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Page 1
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IMPORTANT NOTICE TO POLICYHOLDERS
All of the members of the Chubb Group of Insurance companies doing business in the United States (hereinafter Chubb) distribute
their products through licensed insurance brokers and agents (producers). Detailed information regarding the types of compensation paid by Chubb to producers on US insurance transactions is available under the Producer Compensation link
located at the bottom of the page at www.chubb.com, or by calling 1-866-588-9478. Additional information may be available from your producer.
Thank you for choosing Chubb.
Important Notice:
The SEC Requires Proof of Your Fidelity Insurance Policy
Your company is now required to file an electronic copy of your fidelity insurance coverage (Chubbs ICAP Bond policy) to the Securities and Exchange
Commission (SEC), according to rules adopted by the SEC on June 12, 2006.
Chubb is in the process of providing your agent/broker with an electronic
copy of your insurance policy as well as instructions on how to submit this proof of fidelity insurance coverage to the SEC. You can expect to receive this information from your agent/broker shortly.
The electronic copy of your policy is provided by Chubb solely as a convenience and does not affect the terms and conditions of coverage as set forth in the
paper policy you receive by mail. The terms and conditions of the policy mailed to you, which are the same as those set forth in the electronic copy, constitute the entire agreement between your company and Chubb.
If you have any questions, please contact your agent or broker.
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Form 14-02-12160 (ed. 7/2006)
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POLICYHOLDER
DISCLOSURE NOTICE OF
TERRORISM INSURANCE COVERAGE
(for policies with no terrorism exclusion or sublimit)
Insuring Company: FEDERAL INSURANCE
COMPANY
You are hereby notified that,
under the Terrorism Risk Insurance Act (the Act), this policy makes available to you insurance for losses arising out of certain acts of terrorism. Terrorism is defined as any act certified by the Secretary of the Treasury of the United
States, to be an act of terrorism; to be a violent act or an act that is dangerous to human life, property or infrastructure; to have resulted in damage within the United States, or outside the United States in the case of an air carrier or vessel
or the premises of a United States Mission; and to have been committed by an individual or individuals as part of an effort to coerce the civilian population of the United States or to influence the policy or affect the conduct of the United States
Government by coercion.
You should know that the insurance provided by your policy for losses caused by acts of terrorism is partially reimbursed by the
United States under the formula set forth in the Act. Under this formula, the United States pays 85% of covered terrorism losses that exceed the statutorily established deductible to be paid by the insurance company providing the coverage. Beginning
in 2016, the Federal share will be reduced by 1% per year until it reaches 80%, where it will remain.
However, if aggregate insured losses
attributable to terrorist acts certified under the Act exceed $100 billion in a calendar year, the Treasury shall not make any payment for any portion of the amount of such losses that exceeds $100 billion.
If aggregate insured losses attributable to terrorist acts certified under the Act exceed $100 billion in a
calendar year and we have met our insurer deductible under the Act, we shall not be liable for the payment of any portion of the amount of such losses that exceeds $100 billion, and in such case insured losses up to that amount are subject to pro
rata allocation in accordance with procedures established by the Secretary of the Treasury.
The portion of your policys annual premium that is
attributable to insurance for such acts of terrorism is: $
-0-.
If you have any questions about this notice, please contact your agent or broker.
10-02-1281 (Ed. 03/2015)
JOINT INSURED BOND ALLOCATION AGREEMENT
THIS JOINT INSURED BOND ALLOCATION AGREEMENT (this
Agreement
), effective as of the 16th day of April, 2018, by and
among FS Investment Corporation (
FSIC
), a business development company regulated under the Investment Company Act of 1940, as amended (the
1940 Act
), FS/KKR Advisor, LLC, an investment adviser
registered with the Securities and Exchange Commission (the
SEC
), which provides investment management services to FSIC, Hamilton Street Funding LLC, Locust Street Funding LLC, Race Street
Funding LLC, IC Altus Investments, LLC, IC American Energy Investments, Inc., FSIC Investments, Inc., IC Arches Investments, LLC and IC Northern Investments, LLC (collectively, the
Insureds
) (collectively, the
Insureds
).
WHEREAS, pursuant to the requirements of Section 17(g) of the 1940 Act and Rule
17g-1
promulgated thereunder (
Rule
17g-1
), FSIC is required to maintain a bond issued by a reputable fidelity insurance company, authorized to do
business in the place where the bond is issued, against larceny and embezzlement, covering certain officers and employees of FSIC; and
WHEREAS, the Insureds have entered into a joint insured bond with Chubb Group of Insurance Companies, in accordance with Rule
17g-1
(such joint insured bond as it is currently executed and as it may be amended from time to time, hereinafter, the
Bond
); and
WHEREAS, the Insureds, in order to be covered jointly under the Bond, are required by Rule
17g-1
to be
parties to an agreement that establishes the criteria by which the premiums and any recoveries under the Bond shall be allocated among them.
NOW, THEREFORE, it is agreed as follows:
1.
Amount of Coverage Maintained.
The amount of fidelity coverage under the Bond shall at all times be at least equal to the sum of:
(a) the total amount of coverage that FSIC would have been required to provide and maintain individually pursuant to the schedule set forth in paragraph (d)(1) of Rule
17g-1
had FSIC not been a named
insured under the Bond, plus (b) the amount of each bond which each other named insured would have been required to provide and maintain pursuant to federal statutes or regulations had it not been named as an insured under the Bond (such
amounts, respectively, the
minimum coverage requirement
for each Insured). In addition, a priority layer equal to the total amount of coverage that FSIC would have been required to provide and maintain individually pursuant
to the schedule set forth in paragraph (d)(1) of Rule
17g-1
had FSIC not been a named insured under the Bond shall be designated for FSIC and its wholly owned subsidiaries only. The amount of fidelity coverage
under the Bond shall be approved not less than every twelve months by the Board of Directors of FSIC, including a majority of those directors who are not interested persons of FSIC, as defined by Section 2(a)(19) of the 1940 Act
(the
Independent Directors
).
2.
Allocation of Recovery.
In the event an actual pecuniary loss is
suffered by any two or more of the Insureds under circumstances covered by the Bond, any recovery under the Bond shall be allocated among such Insureds as follows:
a. If the total amount of coverage provided under the Bond exceeds or is equal to the amount of the combined total loss suffered by the
Insureds suffering the loss, then each such Insured shall be entitled to recover the amount of its actual loss.
b. If the amount of loss
suffered by each Insured suffering loss exceeds its minimum coverage requirement as set forth in Section 1 hereof and the amount of such Insureds combined actual losses exceeds the total amount of coverage under the Bond, then each such
Insured shall be entitled to recover (i) its minimum coverage requirement, and (ii) to the extent there exists any excess coverage, the proportion of such excess coverage that its minimum coverage requirement bears to the amount of the
combined minimum coverage requirements of the Insureds suffering actual loss; provided, however, that if the actual loss of any such Insureds is less than the sum of (i) and (ii) above, then such difference shall be recoverable by the
other Insured or Insureds in proportion to their minimum coverage requirements.
c. If (i) the amount of actual loss suffered by any Insured is less than or equal to its
minimum coverage requirement, (ii) the amount of actual loss of another Insured or other Insureds exceeds its or their minimum coverage requirements, and (iii) the amount of the combined actual losses of the Insureds exceeds the total
amount of coverage provided under the Bond, then any Insured that has suffered an amount of actual loss less than or equal to its minimum coverage requirement shall be entitled to recover its actual loss. If only one other Insured has suffered
actual loss, it shall be entitled to recover the remainder of the coverage under the Bond. If more than one Insured has suffered actual loss in excess of the remaining coverage, then they shall allocate such remaining amount of coverage in
accordance with paragraph (b) of this section 2.
3.
Allocation of Premiums.
No premium shall be paid under the Bond unless
the Board of Directors of FSIC, including a majority of the Independent Directors, shall approve the portion of the premium to be paid by FSIC on behalf of each Insured. The premium payable on the Bond shall be allocated between the Insureds as
determined in the sole discretion of the Board of Directors of FSIC.
4.
Amendment.
This Agreement may not be modified or amended
in any manner except by written agreement executed by the parties hereto.
5.
Filing with the Commission.
A copy of this Agreement,
and any amendment thereto, shall be filed with the SEC within 10 days after receipt by FSIC of an executed copy of the Bond.
6.
Governing Law.
This Agreement shall be construed and the provisions thereof interpreted under and in accordance with the laws of the State of New York.
[Remainder of page intentionally blank]
IN WITNESS WHEREOF, the Insureds have caused this Agreement to be executed as of April 16,
2018.
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|
|
FS Investment Corporation
|
|
|
By:
|
|
/s/ Stephen Sypherd
|
|
|
Name: Stephen Sypherd
Title: General
Counsel
|
|
FS/KKR Advisor, LLC
|
|
|
By:
|
|
/s/ Stephen Sypherd
|
|
|
Name: Stephen Sypherd
Title: General
Counsel
|
|
FSIC Investments, Inc.
|
Hamilton Funding LLC
|
IC Altus Investments, LLC
|
IC American Energy Investments, Inc.
|
IC Arches Investments, LLC
|
IC Northern Investments, LLC
|
Locust Street Funding LLC
|
Race Street Funding LLC
|
|
|
By:
|
|
/s/ Stephen Sypherd
|
|
|
Name: Stephen Sypherd
Title: Vice
President
|
FS Investment Corp. (delisted) (NYSE:FSIC)
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